More ESPN, Less CNBC

I remember way back in the late 1970s, when I first took an interest into investing, my folks would show me how to find the stock prices in the morning paper. For one summer, I wrote down the daily closing prices for a handful of stocks. Wasn’t much to it, and it was pretty fun. After a few days of doing it, I realized that I was writing down the prices of where the stocks closed at 4pm EDT the prior day, yet I was reading the paper at 7:30am the next day. I asked my folks about how you could find the price right now, and the answer was “You have to call your stockbroker.” Might seem antiquated, but those might have been saner times.

So, here we are 40 years later, and not only can you make your own buy/sell decisions with only a few keystrokes, but you can find a quote for any stock on the planet in real time. Ah! Technology! Yes, this is a very nice convenience, yet it might provide too much information for the average investor to digest. Now, you throw in 12 hours of financial news on 4 different channels, and this has led to severe information overload in our society.

To be clear, in no way am I criticizing the content of these news shows, as there are many bright minds who are interviewed on a daily basis. What I caution my clients from doing is reacting to opinions and then making snap decisions that could really hurt their long-term returns. So, what are my remedies you might ask? Here are a few simple tips that have kept my client’s emotions in check.

1. When you read something worrisome, call your advisor. Most likely they’ve seen the same news item and can rationally talk with you.
2. Check your statements monthly or even quarterly.
3. Remind yourself that your plan is a lifetime plan, and part of it involves markets that temporarily go down.
4. If you must check your mobile phone for your stock quotes, toggle it from “$ change” to “% change.” Once you realize that your favorite stock being down several dollars is only, say, -.5%, it’s much more palatable.
5. Don’t look at a specific stock’s return (up or down). It’s the return on the entire portfolio that is important.

If you’re a working professional and decided to hire an advisor, trust in your advisor. They’re professionals and monitor markets daily. Your efforts would be better directed at your profession which you know so well. If you’re retired, enjoy your retirement. Travel, hit the golf ball, spend time with family and friends, and watch entertaining shows. You didn’t put in 40 years of work to then spend several hours a day obsessing on the market.